Harmonix sues Activision over royalties, withdraws suit

Harmonix filed a suit against Activision on Monday, claiming over $14.5 …

Activision and Harmonix have not seen eye-to-eye since the latter left the former for MTV. The Guitar Hero and Rock Bandcompatibility issue remains a point of contention between the two companies, and now a new issue has arisen: Harmonix filed a lawsuit on March 10 against Activision for unpaid royalties only to shortly thereafter withdraw the suit and meet privately with the company.

A copy of the lawsuit seen by Ars details the royalty discrepancy. Harmonix claims that Activision and RedOctane have "failed to pay Harmonix its full share of royalties earned in connection with Harmonix's essential and undisputed contributions of its intellectual property and technology to the best selling video-game Guitar Hero III. To date, defendants have wrongfully withheld at least $14.5 million from Harmonix."

A legal agreement made during the production of Guitar Hero I holds that "if a sequel game to Guitar Hero I is produced by a game developer other than Harmonix, but incorporates, uses, or is derived from any Harmonix Property, Harmonix is entitled to an agreed-upon percentage royalty on sales of the sequel game, as well as additional royalties in the form of specific percentages of revenues" from peripheral products like controllers and downloadable songs.

Essentially, Harmonix has pointed the finger at Activision for incorporating "coding, patents, trade secrets, and other proprietary implementations of design and gameplay elements" in Guitar Hero III. Taken with the assured sequels that Activision is working on, Harmonix claims that it stands to lose "tens of millions of dollars per year."

On behalf of Activision, General Counsel George Rose says that the company "believes that it has made sufficient payments to Harmonix and the claims otherwise do not have merit." The two companies are now in talks behind closed doors about the situation. We'll have more on the story as it develops.